Tribunal’s ruling welcome relief to small business prevented from JobKeeper

Tribunal’s ruling welcome relief to small business prevented from JobKeeper

Covid-19 continues to disrupt business operations, creating an uncertain environment for business owners to trade within. In response to the drastic impact of Covid-19 on the Australian economy, the Federal Government introduced the JobKeeper scheme to support small businesses and combat unemployment. Whilst many businesses have benefited greatly from the scheme, some were excluded from Commonwealth support as they failed to meet the eligibility criteria. The recent case of Apted v Commissioner of Taxation considered the requirement for businesses to have an active Australian Business Number (ABN) when applying for the JobKeeper package; the Tribunal finding that the purpose of the scheme was to support businesses and arbitrary eligibility requirements were contrary to this objective.

Overview

Mr Adept was the sole trader of a small business where he worked as an expert valuer in rental disputes up until July 2018 at which point he retired. As such, he cancelled his GST and ABN registration effective June 2018. However, after he decided retirement wasn’t for him, in September of 2019 Mr Apted was engaged to provide services for the odd client. He mistakenly assumed that he was not required to reactivate his ABN as he did not anticipate to make more than $75 000 per year and did not think he needed to be registered for GST or an ABN.

At the end of March 2020, Mr Apted applied to have his ABN reactivated, which was reinstated by the Registrar with a date of effect of 31 March 2020. He then subsequently applied for a JobKeeper payment in April 2020, but his application was rejected as he was deemed ineligible due to his inactive ABN at the 12 March 2020 cut-off date. Mr Apted then contacted the Registry and had his ABN retrospectively backdated to be effective from July 2019 after which he appealed the decision with the Commissioner. His claim again failed on the basis of ineligibility and Mr Apted subsequently escalated the decision of the Commissioner to the Administrative Appeals Tribunal of Australia.

Eligibility Requirements for JobKeeper

There are several requirements set out in the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) that must be met in order for a business to qualify for JobKeeper payments. These include:

  • At 1 March 2020, the entity was an active business; not for profit operating primarily in Australia; or a deductible gift recipient.
  • The entity employed at least one eligible employee during the JobKeeper fortnight being applied for.
  • The entity satisfies the original decline in turnover test: which is generally satisfied when an entity’s projected GST turnover for the test period falls short of current GST turnover for the relevant comparison period by the specified percentage (normally 30%). There are alternative tests for businesses started in 2020 before March 1.
  • The entity satisfies the actual decline in turnover test: which is generally satisfied when an entity’s actual GST turnover for the test period falls short of the relevant comparison period, by specified short fall percentage (normally 30%).
  • The entity satisfies the integrity rules: have an ABN that was active on 12 March 2020; and an amount was included in the entity’s assessable income for 2018-19 income in relation to the business or the entity made a taxable supply in a tax period between July 2018-12 March 2020.

Decision of the Administrative Appeals Tribunal of Australia

In its decision, the Tribunal considered the purpose of the JopKeeper scheme as a mechanism for providing necessary and accessible support to small business owners. The Tribunal found that the Integrity Rule containing the requirement for an active ABN at 12 March 2020 was contemplated by the government as putting trust in the Registrar and the ABN process, rather than a fixed deadline. As a result, where the Registrar decides to use its discretion to retrospectively date an ABN, this does not vitiate the integrity of the ABN for the purposes of JobKeeper eligibility. The Tribunal found in favour of Mr Apted, and reiterated the need for JobKeeper to remain a streamlined and attainable scheme for Australian businesses.

It is worth noting that that the ATO has confirmed that they have lodged an appeal against the decision in the Federal Court of Australia and the possible future implications of this decision remain unclear. However, the ATO maintains the AAT’s decision has not changed the need to satisfy all of the other eligibility conditions.

Other Recent JobKeeper Updates

From the 28th of September 2020, businesses and non-for-profits seeking to claim JobKeeper payments to March 2021 must reassess their eligibility with reference to their actual turnover in the December quarter and demonstrate the required decline turnover test has been met. Further, from January 4th the payment amount has decreased to $1,000 per fortnight for eligible employees and business participants working for 20 hours or more a week on, and $650 per fortnight for employees and business participants who were working for less than 20 hours a week.

How do I check the status of my ABN?

An Australian Business Number is a unique identifier that enables your business to identify itself, avoid PAYG tax, and claim GST credits. It is important as the owner of a small business that you are able to check the status of your ABN and reactivate it before expiry. You can apply or reapply online for an ABN through the Australian Business Register website, and once your application is successful your details will be added to the Australian Business Register. The Register contains the status of all ABN’s including their expiration date. Once you have obtained an ABN it is important you keep your details up to date in the Register, as this is how you will be contacted when your ABN is due for renewal. If you do not receive a notice of renewal, or unsure about the status of your ABN you may need to seek out further assistance.

Further Information

Matters such as these highlight the importance of seeking expert legal and taxation advice when conducting a small business. Mr Adept himself acknowledged his misunderstanding of ABN requirements was because he failed to obtain proper advice. If you are the owner of a small business, and want to understand more about your eligibility for JobKeeper payments or about the implications of an ABN for your business, do not hesitate to contact us on 9963 9800 or via our contact form.

Modern Awards – An Update, June 2020

Modern Awards – An Update, June 2020

Several modern awards have been significantly varied by the Fair Work Commission (‘FWC’) to grant businesses and employees temporary measures to preserve the ongoing viability of businesses and jobs during the COVID-19 pandemic. In addition to the unpaid pandemic leave and annual leave flexibility that has varied over 99 awards since 8 April 2020, the NSW Government has inserted provisions in the Long Service Leave Act 1955 (NSW) relating to pandemic leave. Employers should become familiar with these important industry award changes which we will outline below.

Changes to Modern Awards in 2020

The Tranche 2 awards, including the following listed below, have been finalised and will come into effect from the 29 May 2020. In addition to unpaid pandemic leave, the following changes have been inserted that are temporary and will be reviewed on 30 June 2020:

1. Clerks — Private Sector Award 2010

Operational flexibility: employees can be asked by their employers to do any tasks that they have skill and competency for, even if they are not in their usual classification or normal work, given that the employee has the appropriate licenses and qualifications. If an employee is told to work above their usual classification for more than one day, they must be compensated by being paid at a higher rate.

Work from home agreements: Part-time employees can agree to have minimum engagements reduced from 3 hours per shift to 2 hours. Casual employees can agree to be paid for a minimum 2 hours’ work shift instead of 3 hours.

Ordinary hours change while working at home: Agreements can be made to allow employees to work between 6am to 11pm on Monday to Friday, and 7am to 12.30pm on Saturday.

Reduced hours: Any employee who has had their hours reduced can ask their employer for permission to find more work with another employer and/or access training, professional development and study leave through their employer.

See determination for further information.

2. Hospitality Industry (General) Award 2010 and Restaurant Industry Award 2010

Operational flexibility: An employee can perform any duties within their skill and competency provided that they are licensed and qualified to perform them. Employees engaged to perform higher duties must be compensated at a higher rate than their ordinary classification.

Working hours: An employer may direct a full-time employee to work an average of between 22.8 and 38 ordinary hours per week and be paid on a pro-rata basis. An employer may direct a part-time employee to work an average of between 60% and 100% of their guaranteed hours per week (over the roster cycle).

Annual Leave: An employer may, subject to considering an employees’ personal circumstances, direct the employee to take annual leave with 24 hours notice.

See determination for the Hospitality Industry Award and the determination for the Restaurant Industry Award.

3. Educational Services (Schools) General Staff Award

Temporary reduced hours: An employer may issue a notice of intention in writing to direct an employee to reduce their ordinary hours by up to 25%. The direction will come into effect 5 days after the notice of intention was issued and will remain in force for a period of no more than 12 weeks.

Operational flexibility: An employee can perform any duties within their skill and competency provided that they are licensed and qualified to perform them. Employees engaged to perform higher duties must be compensated at a higher rate than their ordinary classification.

Other awards that have been varied include the Rail Industry Award, Contract Call Centres Awards and Manufacturing and Associated Industries and Occupations Award. See what other awards have changed in 2020 here.

Considerations for Employers

Employers must be aware of their changing obligations surrounding unpaid pandemic leave and any other laws, such as those relating to the JobKeeper subsidy. The greater flexibility in relation to job roles and duties, work hours and leave under some awards is a positive development towards enabling businesses to meet the challenges caused by the pandemic. However, employers must proceed with caution to ensure that their work agreements comply with these award variations.

Further Information

For further assistant on any matter relating to work from home policies or any workplace matter, please contact one of our experience employment and litigation solicitors on 02 9963 9800 or [email protected].

COVID-19: Witnessing Legal Documents Electronically

COVID-19: Witnessing Legal Documents Electronically

The Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (NSW) (The Regulation) is another government initiative in response to COVID-19. The Regulation officially came into force on 22 April 2020 and aims to provide clarity on how some documents can be witnessed by an eligible witness via audio visual link. One of the most critical aspects of the Regulation is that it does away with the requirement for a witness to be physically present to witness the execution of documents. In this blog, we answer some of the most common questions regarding the new method of witnessing legal documents electronically.

What does audio visual link mean?

Audio visual link means any technology that enables audio and visual communication between two persons who are not physically present in the same room. This usually consists of the classic video conferencing platforms such as Zoom, WhatsApp, Skype and FaceTime.
What documents can be witnessed by audio visual link?

The below documents can now be witnessed through an audio visual platform:

  • a Will;
  • a Power of Attorney or Enduring Power of Attorney;
  • an Appointment of Enduring Guardian;
  • a deed or agreement;
  • an affidavit (including any annexure or exhibit to an affidavit) except for the purposes of divorce; and
  • a statutory declaration.

How do I witness a document by audio visual link?

In order to have a validly witnessed document it is imperative that the Regulation is followed correctly and carefully. In accordance with the Regulations, a person witnessing the signing of a document using an audio visual link must:

  1. Observe the person signing the document in real time (i.e. not via a pre-recorded video) to confirm the signature is legitimate.
  2. Next, the person witnessing the document must sign the document (or a copy) as soon as possible after the witnessing via audio visual link to confirm they witnessed the signature. This could be done on a hard copy of the original document that the signatory signed which is either sent in the post or electronically to the witness.a.
    • It is important to note that the person witnessing the document must be reasonably satisfied that the document signed by the witness is the same document signed by the signatory.
  3. The person witnessing must then state on the document the method of witnessing (either countersigned or counterpart) that was used and that it was witnessed in accordance with the Regulation.
    • For example: “I, [insert name here] attest that this document was signed in counterpart and witnessed by me by audio-visual link via Skype in accordance with clause 2 of Schedule 1 to the Electronic Transactions Regulation 2017”.

Are there changes to who can act as a witness?

The Regulation has altered who can witness a Statutory Declaration. Traditionally, only Justices of the Peace and Solicitors could act as a witness to a statutory declaration.

The Regulations have been amended to allow the below persons to witness a statutory declaration

  • financial advisors;
  • pharmacists;
  • nurses;
  • accountants who are a member of Chartered Accountants Australia, CPA Australia or the Institute of Public Accountants;
  • psychologists;
  • veterinary surgeons;
  • police officers; and
  • teachers (only those employed on a permanent full time or part time basis at a school or tertiary education institution).

Further Information

With so many changes happening in the legal sector due to COVID-19 it is important to be fully aware of how these may practically impact you. If you would like more information on how we can assist you with your matter, do not hesitate to contact us on 9963 9800 or via our contact form. Check out our blog for further information and analysis on the restrictions and rules in place during COVID-19.

Residential Leases during COVID-19: What You Need to Know

Residential Leases during COVID-19: What You Need to Know

Coronavirus has undoubtedly had a substantial impact on the Australian economy. This unfortunately means that some residential tenants are struggling to keep up with their rental payments, due to increased unemployment or standing downs. However, the NSW government is introducing measures to support landlords and tenants and encourage them to work together through this difficult time. In this article, we explore some of these measures to help you understand landlord and tenants obligations under these new initiatives.

New Measures:

The new measures include an interim 60 day stop on landlords issuing termination notices or applying for a NSW Civil and Administrative Tribunal eviction order due to rental arrears, where tenants are financially disadvantaged by COVID-19. This will be followed by limitations for 6 months for rental arrears evictions for tenants financially disadvantaged by COVID-19.

For Tenants:

To meet the requirements for the 60 day stop on evictions, residential tenants needs to demonstrate that they are impacted by COVID-19. A household is impacted by COVID-19 if:

  1. one or more rent-paying members of a household have lost employment or income (or had a reduction in employment or income) due to COVID-19 business closures or stand-downs, or
  2. one or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19 or due to COVID-19 carer responsibilities for household or family members, and
  3. the above factors result in a household income (inclusive of any government assistance) that is reduced by 25% or more.

What are the obligations for a tenant?

  • To be honest and act in ‘good faith’ in negotiations with their landlord
  • Provide the landlord with relevant information and proof regarding their situation if they have been impacted by COVID-19
  • Tenants should have regard to the landlord’s financial situation, including whether they rely on the income to cover expenses such as mortgages
  • Tenants must work towards achieving a mutually satisfactory outcome.

All tenants who are not impacted by COVID-19 are expected to honour their existing tenancy agreements and continue to pay all rent and charges in full.

For Landlords:

It is important for landlords to have regard to the tenant’s situation and be considerate of the financial burdens they are facing due to COVID-19. However, this must be weighed against the landlord’s personal financial situation and how a rental reduction may impact their income.

What are the obligations for a landlord?

  • To negotiate a rent reduction if their tenant has been impacted by COVID-19
  • Landlords can only seek to give a termination notice or apply for an eviction after the interim 60-day stop if it is fair and reasonable in the context of the specific case
    • Only after negotiations have failed can a landlord seek to terminate the agreement. The NSW Civil and Administrative Tribunal (NCAT) will have discretion to assess whether it is fair and reasonable to evict in the circumstances of each case
  • To be honest and act in ‘good faith’ in negotiations with their tenant
  • Landlords should be honest and frank about their financial situation, including whether they rely on the income from the tenant to cover expenses such as mortgages
  • They must work towards achieving a mutually satisfactory outcome with the tenant.

Fair Trading will also be able to assist landlords and tenants trying to reach an agreement if needed.

Further Information

It is important to be fully aware of your obligations under your residential lease agreement. If you would like more information on how we can assist you with your matter, do not hesitate to contact us on 9963 9800 or via our contact form. Check out our blog here for further more information and analysis on the restrictions and rules in place during COVID-19.

Issues Facing Company Directors During COVID-19

Issues Facing Company Directors During COVID-19

COVID-19 continues to disrupt the operation of businesses globally, presenting new challenges to company directors on how to continue to carry out their duties and obligations. While many directors are focused on the immediate practical implications of operating in these challenging times, directors must ensure they keep in mind their broader obligations to stakeholders under the Corporations Act 2001 (Cth). In this article, we address the potential issues facing directors in the context of the current pandemic.

Directors’ Duties

There are numerous statutory obligations directors must adhere to. Directors must continue their duty to act in good faith and in the best interests of the corporation. Given the uncertainties surrounding the COVID-19 pandemic it may be challenging for directors to determine how their immediate actions may impact the long-term success of the company and its various stakeholders.

While directors must of course focus on the immediate implications of operating in these uncertain times, they must ensure that they continue to act in good faith and in a reasonable manner and make decisions based on the most reliable and up-to-date information in front of them. Continue to place priority on protecting the health and welfare of staff, and consider enacting contingency plans to avoid exposing the company to outside risks.

Financial Reporting and Annual General Meetings

The coronavirus has temporarily impacted companies’ abilities to hold annual general meetings (AGMs). For listed and unlisted public companies required to hold an AGM by 31st May 2020, ASIC has confirmed that it would take no action if AGMs are postponed up to the end of July or if AGMs are held virtually in compliance with s 249S of the Corporations Act. The holding of virtual AGMs is permitted under the Corporations Act, however entities must check whether their constitution restricts meetings being held in this way and seek legal advice on section 1322 of the Corporations Act.

Insolvency and ‘COVID-19 safe harbour’ provisions

The Coronavirus Economic Response Package Omnibus Act 2020 included, among other measures, a new section 588GAAA into the Corporations Act granting temporary relief for financially distressed businesses. The amendments provide a ‘safe harbour’ to grant relief for directors from potential personal liability for insolvent trading.

In order to be able to rely on these measure, the debt leading to insolvency must have been incurred in the ordinary course of the company’s business, during the six month period commencing from the 25 March 2020 (or longer as prescribed in another regulation), and before any appointment of an administrator or liquidator during that period.

In relation to insolvent trading, directors should seek advice early from a qualified and independent advisor about the company’s financial affairs and the options available to manage the disruption caused by COVID-19.

Check out our blog here for further more information and analysis on the restrictions and rules in place during COVID-19.

Further Information

It is important to be fully aware of your duties and obligations as a director during this rapidly evolving and challenging environment during COVID-19. If you would like more information on how we can assist you, do not hesitate to contact us on 9963 9800 or at [email protected].